By: John P. Napolitano, CFP®, CPA, PFS, MST

How many times in your life did you experience something that was a complete surprise?

On the personal side, it may be about a loved one’s marriage, a poor student’s phenomenal success in the business world or a blizzard in April. We’ve all experienced something that turns out the exact opposite of what you were sure would happen. This also occurs in the financial world, so the next time someone tells you what’s going to happen in the world of personal finance, remind them of these situations.  

Let’s start with interest rates. It was only a few years ago when the entire world was seriously concerned about rising numbers. For a brief time, it appeared as if the pundits were right, rates did climb for a brief while. But the reality is that interest rates have never been this low in my 63 years of living. If you based your entire financial life under the presumption that rates were indeed rising, you failed miserably.

The US equity markets has just finished one of its best quarters of positive performance in history. With COVID-19 inflicting havoc in many people’s lives, jobs and businesses, it’d be reasonable to think that was impossible. But to base your entire financial future and portfolio on such a strong presumption, would have once again, been about the worst thing that you could’ve done. While even I find it odd that markets have rebounded so strongly with the COVID noose still above our heads, they did and those who had confidence in capitalism were rewarded this quarter. And to go along with the theme, that doesn’t mean that next quarter will be positive or negative.

What about real estate during the COVID crisis? Most people were telling me that they were concerned that the values of residential real estate would nosedive. The reality is that houses which were tough to sell a year ago, large homes with big yards and pools, are now very marketable and desirable under the current situation. Who knows what will happen next, but with mortgage rates so low, buyers are still outnumbering sellers in many suburban areas.

And what about taxes? It’s true the only guarantees that we have in life are death and taxes, but I’d like to add another. And that other is that taxes will change. Remember 2010? That was the first (and only) year since 1915 where there was no federal estate tax. Very few benefited from that unless you actually died in 2010, but many did alter their planning to take advantage of that one year window. This may be the time for families with net worth’s in excess of $20 million to do some estate planning in case this changes with a new administration in November.

The moral of this story isn’t to stick your face in missed opportunities. It’s to bring real history to your attention to let you know that all of these, and then some we haven’t seen before will continue to happen throughout history. Don’t be so radical or sure of yourself, get advice and act prudently forever.

 

 

John P. Napolitano CFP®, CPA is CEO of US Wealth Management in Braintree, MA. Visit JohnPNapolitano on LinkedIn or uswealthnapolitano.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and US Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200.    1-05030664 (7/17/20)